Most everyone in our industry is aware of the trials—both literally and figuratively—of California insurance agent Glenn Neasham, who was convicted in October 2011 of theft with respect to the property of an elder. In 2008, he sold a fixed indexed annuity policy to a senior consumer who was later determined to have suffered from dementia. Mr. Neasham’s theft conviction was ultimately overturned by the California Court of Appeals, and that decision was upheld in January 2014 when the California Supreme Court rejected the State’s petition to review the appellate court’s decision.

While the fixed annuity industry can take some comfort from the ultimate resolution in the Neasham case, the appellate decision will not be a published opinion and therefore has limited precedential value. Moreover, there are a number of recent (and some current) state regulatory and/or state court actions taken against individual insurance agents involving annuity sales to senior consumers. And if that were not unsettling enough, there is a steadily growing trend among state legislatures and state regulatory agencies to address the issue of elder financial abuse or exploitation.

While the majority of states currently address financial abuse/exploitation of vulnerable adults as part of their human welfare statutes and criminal codes, most of those states are not “elder specific”—they do not specify that just reaching a certain age, per se, makes a person at risk or vulnerable for the purpose of requiring state protection against financial exploitation. Some of the states that are elder specific alone without mitigating vulnerabilities include California, Illinois, Louisiana, Massachusetts, Missouri, Montana, Nevada, Ohio, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, and Wisconsin.

However, a quick survey of current state legislative activity suggests that a number of states are expanding their current laws relating to elder financial exploitation or are, for the first time, including elders—that is, senior consumers who suffer no disabilities or incapacities other than age alone—in the broader category of individuals vulnerable to financial exploitation. Some of these bills are summarized here:

CA Senate Bill 847

Includes victims of financial elder or dependent adult abuse within the definition of crimes that are eligible for compensation and would provide reimbursement for financial counseling for those victims. The bill would make a derivative victim ineligible for compensation if the only crime the victim suffered was financial abuse of an elder or dependent adult. The bill would also provide related legislative findings and declarations, including the finding that elders and dependent adults “often fall victim to scams such as … the sale of costly and ineffective annuities.” Currently, California’s penal code defines an elder as someone age 65 or older.

CO Senate Bill 98
Amends the Colorado Criminal Code (“Wrongs to at-risk adults”). The bill adds language that allows for “any thing of value” to the current definition of exploitation of at-risk elders, which currently includes “money, assets, or property.” Language is added to the definition of “abuse” to include “exploitation.” Language confining the action to someone “who exercises authority over an at-risk elder” is removed from the definition of “undue influence.” Establishes the new crime of criminal exploitation of an at-risk elder, which is defined as a person 70 years of age or older.

FL House Bill 409
Relates to offenses against vulnerable persons; revises when an out-of-court statement by an elderly person or disabled adult is admissible; includes fraudulent use of personal information to include persons 60 years or older; relates to breach of a fiduciary duty; provides for jury instructions; provides that certain inter vivos transfers are a result of exploitation; provides a civil remedy for theft or exploitation. Companion Bill, FL Senate Bill 588.

GA House Res. 1101
Resolution requesting partnerships with organizations focused on protecting the elderly … and those with limited financial understanding to ensure that adequate safeguards and protections are put in place. Note: the focus here is on short-term bank loans, but it is included in this roundup as an example of the state’s interest in protecting elders from financial exploitation, generally. See also TN House Joint Resolution 645, below.

HI Senate 2228
Establishes within the Executive Office on Aging an Elder Justice Coordinator to plan and implement statewide initiatives to prevent seniors from elder abuse and fraud. (Currently, Hawaii’s financial exploitation statutes are not elder specific.)

IA House File 2003
Expands the definition of a “crime” for purposes of the crime victim compensation program to include a violation of Iowa Code § 715A.8 (identity theft) and the financial exploitation of a person who is 65 or older or who is a dependent adult as defined in § 235B.2. “Financial exploitation” means the criminal act or process of taking unfair advantage of a person for one’s own personal or pecuniary profit, without the informed consent of the person, including theft, by the use of undue influence, harassment, duress, deception, false representation, false pretenses, forgery, fraudulent practices, or securities fraud. Currently, Iowa’s financial exploitation laws are not elder specific.

IA House File 2106
Relates to older individuals, including civil and criminal protections; establishes provisions relating to elder abuse, which is the abuse, neglect, or financial exploitation of an older individual; provides that an older individual is defined as an individual who is 60 years of age or older; directs the Department on Aging to establish an elder abuse resource and referral program; provides that the purposes of the program are to empower older individuals to maximize their autonomy. Currently, Iowa’s financial exploitation laws are not elder specific.

IA Senate File 2239
Establishes provisions relating to elder abuse, which is the abuse, neglect, or financial exploitation of an older individual. “Older individual” is defined as an individual who is 60 years of age or older. The bill directs the Department on Aging to establish an elder abuse resource and referral program. The bill establishes the crime of financial exploitation of an older individual. A person commits financial exploitation of an older individual when the person stands in a position of trust or confidence with the older individual and knowingly and by undue influence, deception, coercion, fraud, breach of fiduciary duty, or extortion obtains control over or otherwise uses the benefits, property, resources, belongings, or assets of the older individual. Currently, Iowa’s financial exploitation laws are not elder specific. (Formerly IA SF 2117)

IN Senate Bill 137
Requires the legislative council to assign the topic of adult protective service laws to an appropriate study committee during the 2014 interim, to include review of programs in other states regarding the financial exploitation of the elderly. Currently, Indiana’s financial exploitation laws are not elder specific.

MS Senate Bill 2451
Authorizes the Mississippi Leadership Council on Aging to establish a Mississippi Senior Protection Unit in the Division of Aging and Adult Services to protect and serve Mississippi senior citizens and to investigate and prosecute crimes against Mississippi vulnerable senior citizens and elder abuse. “Elder abuse” for these purposes is defined as mental, physical, sexual, and financial crimes committed against those persons over the age of 60 occurring in the State of Mississippi. Currently, Mississippi’s financial exploitation laws are not elder specific.

NH House Bill 1555
Establishes the crime of financial exploitation of an elderly, disabled, or impaired adult and imposes a mandatory sentence of imprisonment for a second or subsequent offense of criminal neglect or financial exploitation of such person. Currently New Hampshire’s financial exploitation laws are not elder specific.

NJ Assembly Bill 738
Creates the offense of theft by financial exploitation of a vulnerable person, here to include a senior citizen defined as an individual age 62 or older. Currently New Jersey’s financial exploitation laws are not elder specific. Companion Bill, NJ Senate Bill 925.

NJ Assembly Bill 2461
Creates the offense of financial exploitation of the elderly, defined as any person who is 60 years of age or older and is suffering from a disease or infirmity associated with advanced age or suffers from a mental disease, defect, or condition that renders the person incapable of deciding whether to give or withhold consent to taking, obtaining, or withholding of his property.

NY Senate Bill 6291
Establishes a statewide toll-free telephone number for the purpose of receiving telephone calls alleging abuse or maltreatment of an elderly person, including but not limited to abuse, neglect, or financial exploitation.

NY Senate Bill 143
Amends the elder law in relation to financial exploitation of the elderly, and amends the state finance law in relation to creating the Financial Exploitation Outreach, Education and Training Fund.

NY Senate Bill 720
Creates SAVE, the “Senior Anti-Violence and Enforcement Act.” Abuse includes financial or material exploitation. A senior is defined as an individual 60 years of age or older.

NY Assembly Bill 591
Directs the Office of Children and Family Services to collect, track, and report data on elder abuse for the purpose of identifying the incidence of elder abuse among the elderly. Abuse to include financial exploitation. Companion Bill, NY Senate Bill 2323.

SC Senate Bill 1040
Relates to the protection of vulnerable adults from abuse, neglect, or financial exploitation; defines a senior citizen as a person age 60 or older and extends application of the protections of the article to senior citizens; changes existing criminal penalties; creates duties related to discharging vulnerable adults and senior citizens from certain settings. Currently, South Carolina’s financial exploitation laws are not elder specific.

TN HJR 645
Resolution requesting partnerships with organizations focused on protecting the elderly … and those with limited financial understanding to ensure that adequate safeguards and protections are put in place. Note: the focus here is on short-term bank loans, but it is included in this roundup as an example of the state’s interest in protecting elders from financial exploitation, generally. See also GA HR 1101, above.

WV Senate Bill 397
Clarifies the definition of “financial exploitation” of the elderly or certain other protected persons and declares that being a guardian, conservator, trustee, or attorney or holding power of attorney is statutorily alone not a defense to financial exploitation.

It is clear from the summary above that there is an increased interest at the state level in expanding statutory protection for senior consumers from elder financial abuse and exploitation. And when a “senior” or elder is defined as someone who may be as young as 60, annuity professionals need to be especially scrupulous in making suitable sales. Of course, NAFA believes that suitability is the gold standard in all sales, regardless of the purchaser’s age.